Making Sure Disruptors Don’t Become Followers…The Loyalty Potential of the On-Demand Economy

According to new data from the National Technology Readiness Survey (NTRS) by Rockbridge Associates, the on-demand economy grew by 58 percent in 2017. There is now an app for every service and today’s customers expect instant gratification. From car rides, to dog walking services, to food delivery for any kind of food imaginable, we’re seeing more and more on-demand apps pop up all the time, leaving consumers with endless options to live their life on-demand.

But that leaves the question–with a new app/service popping up everyday, how can these companies create a loyal customer base?

The key premise behind the on-demand economy that has risen to success over the past decade is how it’s taking on the establishment and upsetting the traditional B2C workflow. With that in mind, these apps and companies need to make sure not to get caught up in the traffic of traditional loyalty programs. For example, the new loyalty programs recently announced by both Uber and Lyft are essentially the “more you buy” (ride) the “more you save” (credits) model. That’s fine, but it will be disappointing if it’s all about a published loyalty program with straight math.

The amount of personalized information that these apps pull in (and customers agree to offer up) should be a goldmine for brands looking for loyalty. Discounts are great, but the on-demand economy can offer so much more. For example, with ride-sharing, Uber and Lyft have insight into the neighborhoods you frequent, businesses you were picked up from, the times you’re usually traveling, what card you’re using, etc. Why not use that information for “surprise and delight” offers–extra points earned when you take a ride to a SoulCycle class, happy hour offers to a bar you’ve frequently taken a ride home from, or a co-promotion a movie theatre nearby in your city?

Uber and Lyft aren’t the only on-demand services getting on board with the loyalty trend. Businesses who use Grubhub earn 1 point for every dollar spent in their account. They can then redeem their points online for gift cards to Airbnb, Crate & Barrel, Fandango and other vendors that are delivered in 1-2 weeks. As a member of Grubhub’s Catering Concierge service, companies gain the benefits of real-time catering support, personalized recommendations based on their business profile and past orders, managed orders, and double rewards on every order. Companies can take advantage of the service for 3% of their order total.

In August 2018, DoorDash rolled out DashPass–for $9.99 customers of the subscription service are charged no delivery free on orders of $15 of more. According to the DoorDash blog, during their pilot testing, the average DashPass subscriber saved over $20 per month, even with the monthly subscription fee.

Everything can’t be functional. That will just lead consumers to play Uber off of Lyft and vice versa, racking up points on whoever has the best deal that day. Nobody wins. Whoever wins the surprise and delight game will likely tip the balance of share of mind in their favor the next time a mutual customer has somewhere to go. That’s what every successful loyalty program does. It doesn’t reward existing behavior (or discount it) so much as it incents incremental behavior. That’s where apps can go from on-demand to in-demand.